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The bitcoin apocalypse doesn't seem to be upon us

The world’s pre-eminent cryptocurrency may be in for a big change, but investors don’t seem too worried.

by Peter A. McKay
Aug 1 2017, 8:47am

The world’s pre-eminent cryptocurrency may be in for a big change, but investors don’t seem too worried.

The bitcoin market rose for a third straight day Monday, with the virtual currency trading late in the day at $2,817.50, up $71.17. Over its three-day run, it gained almost $100, or 4 percent.

In fact, the value of bitcoin has held up relatively well recently despite a looming technical change that roiled the cryptocurrency community and showed signs of undermining confidence in the currency earlier this year.

With the volatility of bitcoin, it’s still primarily just used as a trading tool for speculators. For a currency to be useful to, say, pay your bills or your rent, it usually has to have some stability so that both sides know what’s being exchanged. That predictability has been elusive for bitcoin so far, but some of the cryptocurrency’s fans are trying to change that in a big way.

On Tuesday a splinter group of developers are expected to launch a new version of bitcoin’s blockchain — the technical term for the audit trail attached to each coin that allows it to be verified as a means of exchange. They argue that this new version of the blockchain, called Bitcoin Cash, will include more information about the transaction history and the people who’ve exchanged each coin in the past. Thus, it could allow bitcoin to be used more freely as an actual means of exchange, not just speculation.

Meanwhile, proponents of the existing system argue it’s better suited for individual users, not corporations, and protects the anonymity of transactions better.

This was a major sticking point for the bitcoin market beginning back in June, which helped to send the currency down almost 40 percent. The worry at the time, which has since subsided, was that the different blockchains might make it hard to use existing bitcoins at all.

Even after its latest gains, bitcoin still hasn’t fully recovered from that earlier drubbing and remains 6 percent down from its June highs. Of course, that’s not horrible if you look at the bigger picture: Bitcoin has still nearly tripled in value this year.

With the launch of a new network for Bitcoin Cash imminent, however, selling activity has dried up in recent days. Rafael Olaio, operator of the bitcoin payment platform Ripple, told the cryptocurrency research site CoinDesk that traders seem to be holding onto their existing bitcoins waiting to see whether they can get a better deal on the new platform.

Some other developments to watch:

  • For once, bitcoin seemed to steal some thunder from its red-hot rival ether on Monday. The ether was nearly unchanged at $197.37.
  • The world of bitcoin exchanges remains as rough-and-tumble as ever. Praveen Kumar, chairman and CEO of Belfrics Global, has unveiled plans for new markets in Kenya and other African countries. But on the downside, U.S. authorities are prosecuting the founder of the BTC-e exchange on money laundering charges.
  • If you’re looking for signs of a top to the bitcoin bubble, here’s another candidate for the file: A New York City Department of Education employee has been disciplined for mining bitcoins on his work computer.